Despite cheaper oil, manufacturers cool on price cuts
Manufacturers remain defiant in reducing prices of basic and prime commodities despite the slipping costs of petroleum products, the Department of Trade and Industry (DTI) said.
DTI Undersecretary Victorio Dimagiba said the agency has been in continuous dialogues with various manufacturers to discuss prices and make a review for possible adjustments relative to the substantial drop in oil prices.
Dimagiba said while manufacturers did not deny prices of raw materials, fuel, and electricity are declining, they stressed the high cost of trucking and shipping as well as foreign exchange rate are offsetting such drop.
“Manufacturers remain insistent that trucking and shipping costs remain high and depreciation of the Philippine peso affected the prices of some imported materials, thereby hampering their decision to roll back prices of basic goods,” Dimagiba said.
For meat materials, the DTI said Australia and New Zealand have been the best sources for manufacturers due to the savings they incur from the zero tariff in these countries.
However, manufacturers claim that drought pushed the prices of meat materials to increase, forcing them to import from Brazil and Ireland which impose 10 percent tax duty.
Dimagiba said with all these issues, manufacturers clamored for further study and dialogue with DTI and requested for the agency to look into other elements that affect pricing beside fuel.
“The DTI will continue to dialogue with the manufacturers on bringing down the SRPs of non-agricultural basic and prime goods at a level which is reasonable for both the consumers and business. The department is aware and understands the concernment of all stakeholders that is why we are very conscientious in addressing this matter,” he said.
“We have a reason for why we think they should roll back prices but they will be the ones to decide. Under the law, SRP (suggested retail price) is set by manufacturers,” he added.
Based on its earlier computation, the DTI said the drop in prices of petroleum products could translate to a reduction in SRPs of basic and prime goods by 1.12 percent to 1.60 percent or 11 centavos to P3.46.
The Department of Energy said retail prices of oil have dropped significantly in 2015, resulting in a 37.8 percent price decline in diesel and 16.28 percent in fuel oil.